Antitrust expert expects OK for US Airways merger

A former antitrust specialist in the U.S. Justice Department cites the lack of overlapping routes and hubs as a major reason why the expected US Airways-American Airlines merger will win approval from federal regulators.

Alison Smith, a partner in the Houston office of international law firm McDermott Will & Emery, told me in an interview that the basis for analyzing mergers in recent years has centered on route networks. â€œIf you have two airlines with complementary networks, the government sees that as benefiting the customer,â€ she said.

Charlotte Douglas International Airport remains the largest hub for Tempe, Ariz.-based US Airways. The carrier's other hub cities include Philadelphia and Phoenix. American Airlines concentrates its network on five primary cities and airports: Dallas-Fort Worth, New York, Miami, Chicago and Los Angeles.

Smith was deputy assistant attorney general in the antitrust division at the U.S. Justice Department during the presidency of George H.W. Bush. In her current role as a partner at the Houston firm, she works on antitrust cases and other business litigation.

â€œThe question in merger analysis is: What is the effect of competition on the relevant market? (Regulators) look at specific routes and ask whether there is significant competition.â€

By that measure, she said, the US Airways-American marriage looks likely to pass the test. Both airlinesâ€™ boards are scheduled to meet Wednesday to discuss the merger. If a deal is completed, the combined airline would be known as American Airlines and be based in Fort Worth, Texas, home of American Airlines pareny AMR Corp. US Airways CEO Doug Parker would run the airline.

Analysts say Charlotte will retain its hub because of the low costs at the airport and the geographic diversity it brings to Americanâ€™s existing network. US Airways accounts for 90 percent of the air traffic in Charlotte, with 600 daily flights and control of 65 gates at the airport.

US Airways generated a record $637 million profit in 2012 on revenue of $13.8 billion, according to financial results reported last month. American, which remains in bankruptcy court after filing for Chapter 11 protection from creditors in November 2011, lost $1.9 billion on sales of $25 billion. It reported operating profit of $494 million.